India Q4 FY23 GDP growth: The better-than-expected gross domestic product (GDP) print for the March 2023 quarter (Q4FY23) has economists, stock market analysts, and industry experts super bullish on economic growth. They believe that the growth rate has cemented India's position among the fastest-growing major economies in the world.

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India’s economy grew by 6.1 per cent in the January-March quarter of 2022–23, pushing the annual growth rate to 7.2 per cent on account of better performance by agriculture, manufacturing, mining, and construction sectors, official data showed on Wednesday. The growth propelled the Indian economy to $3.3 trillion and set the stage for achieving $five trillion targets in the next few years, according to a PTI report.

The GDP had grown by four per cent in the January–March quarter of 2021–22. In its second advance estimate released in February, the NSO projected GDP growth for 2022–23 at seven per cent.

Mohit Ralhan, Chief Executive Officer at TIW Capital, said the most critical was the growth in private investment activity, which grew at a meagre 2.8 per cent during the period. Gross fixed capital formation was up 8.9 per cent, becoming the major growth driver while government expenditure took a back seat. Robust exports and lower imports also helped growth, as the trade balance came in largely flat in the fourth quarter. Agriculture grew 5.5 per cent while manufacturing growth came in at 4.5 per cent, a substantial improvement after two consecutive quarters of decline. Construction and other contact-intensive services continued to demonstrate robust growth. "It augurs well for the coming quarters," Ralhan added.

Although the RBI expects growth to moderate to 6.5 per cent YoY in FY2024 owing to global factors, India will still remain among the fastest-growing major economies in the world and may surprise on the upside, Ralhan said further. 

Impact on stock markets

The stock market is likely to scale new peaks in the coming sessions as the Indian economy is firing on most cylinders, and it's just the beginning of a multi-year upcycle in the economy ahead, analysts note. They say that the markets will hit multiple fresh peaks in the short term (4-6 months) as a host of factors point towards robust growth in the economy.

"From the equity market point of view, the strong growth in the manufacturing sector only reinforces the trend seen in Q4 quarterly results where many mid-sized companies in sectors like engineering, auto ancillaries, building materials, etc. have shown a strong volume offtake," said Gaurav Dua, Head, Capital Market Strategy, Sharekhan by BNP Paribas.

Dua further said that Nifty has broken out of the 2,000-point range of 16,000–18,000 and the market seems to be set to scale a new peak in H2 of 2023. Interestingly, the broader markets are also doing well after a corrective phase of 18–20 months post-peaking out in October 2021. "We remain constructive on equity markets given our conviction on the beginning of a multi-year upcycle in the Indian economy ahead."

G. Chokkalingam, founder and managing director of Economics Research, also shares similar views. In his words, "The stock market will certainly hit a fresh record high soon—maybe within a week or month—as the GDP growth is significantly above the estimates. A host of factors, such as robust growth in manufacturing, construction, and agriculture, improvement in corporate earnings, capex plans, and PLI schemes, among others, point towards improvement in GDP growth going ahead. Therefore, a culmination of all these factors will lead to indices hitting all-time high levels continuously—not just once, but every week or every month, a new record will be created in the short term, like 4-6 months." Post that, the Lok Sabha elections, which are slated to be held in 2024, will play a key role in influencing investor sentiment, the expert told Zeebiz.com.

Meanwhile, Gurmeet Chadha, CIO & Managing Partner at Complete Circle Wealth, sees Nifty becoming Sensex in the next 10 years. Post-GDP announcement, Chadha tweeted: